Nokia CEO: company must jump from our “burning platform”

In a strongly-worded internal memo that was leaked this week, Nokia CEO Stephen Elop described the company as being "years behind" its competitors. He says that Nokia stands on a "burning platform" and must change course in order to survive.

Elop's memo starts by describing a scenario in which an oil platform explodes, forcing a man who is trapped on the platform to leap off into the water in order to avoid incineration in the flames. He likens Nokia's current position in the mobile market to the situation faced by the man on the burning oil platform. Engadget has published the full text of the memo and says that its contents have been confirmed by several sources.

Elop highlights Nokia's crumbling marketshare, declining brand appeal, and slow progress reacting to changes in the market as indications that the company is in serious trouble. He says that Nokia's flagship Symbian platform is no longer competitive and that the company hasn't moved quickly enough to deliver products with the more modern Linux-based MeeGo operating system.

He contends that Nokia failed to mobilize an adequate response to Apple's launch of the iPhone. More significantly, he acknowledges that Nokia still hasn't managed to create a product that rivals the iPhone user experience.

Android's enormous growth and widespread industry acceptance is another key concern that Elop discusses in his memo. He expresses dismay at the fact that Android and assorted variants were able to displace Nokia as the handset volume leader in a mere two years.

Apple and Google are already carving up the high-end market, but Elop fears that Nokia is also on a trajectory to lose the low-end market—which the company has historically identified as its strongest segment. Handset makers are scaling down Android and bringing it to lower-cost phones while Chinese manufacturers are pumping out increasingly-sophisticated budget handsets.

Elop paints Nokia as a company that faces unsustainable marketshare losses and that simply isn't innovating fast enough to keep up with its rivals. To make matters worse, he says, the company is "not even fighting with the right weapons" as it struggles to regain its competitiveness. He argues that Nokia needs a strong ecosystem, not just better devices.

"Why did we fall behind when the world around us evolved? This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven't been delivering innovation fast enough," he wrote. "Nokia, our platform is burning."

Quenching the blaze

Elop says that the company will unveil a "new strategy" on Friday with the aim of changing course. Although the specific details of the new plan aren't known yet, there has been a great deal of speculation. It's widely-believed that Elop is preparing to reorganize the company and replace many senior executives.

It's also possible that a more drastic change in direction will surface. Due to Elop's previous employment at Microsoft, many of the rumors have focused on the possibility of Nokia adopting Microsoft's nascent Windows Phone 7 platform.

Although anything is possible at this point, we still consider adoption of Microsoft's mobile phone platform a highly unlikely move for Nokia. Elop's emphasis on the importance of a robust ecosystem with which to compete suggests that he recognizes the need for Nokia to have technical autonomy and a platform that isn't tied down by another vendor.

Microsoft is still in the process of erecting an ecosystem around Windows Phone 7, and it's struggling to win mindshare from consumers and developers. There is some uncertainty about the future of Microsoft's mobile platform and there is little guarantee that it will have serious staying power and will continue evolving in a way that is beneficial to Nokia's long-term interests.

One of the most important ingredients in Apple's winning mobile formula is the company's ability to build the product from top to bottom—creating both the hardware and the software experience together. Nokia can't do that if it becomes just another Android or Windows Phone 7 vendor.

I'm convinced that Nokia's problem isn't exactly its platform strategy. Nokia's excellent Qt software development toolkit can help the company reduce time to market and develop significantly more competitive user experiences. MeeGo, which is more open and flexible than Android, also has plenty of potential that is just waiting to be unlocked. Nokia's real problem is poor execution—the company isn't putting its most powerful assets to good use.

Switching to Windows Phone 7 right now would just put Nokia back at the starting line and wouldn't fix the underlying performance problems and execution failures that hold the company back from being successful.

Nokia needs to go all-in with MeeGo, put a strong emphasis on design and usability, and get some better products to the market—then engage in serious developer outreach. A large audience of developers is already building cross-platform applications with Qt. The toolkit offers absolutely everything that those existing third-party developers need to refit their software with competitive touch-enabled user interfaces for MeeGo. Nokia needs to get Qt developers excited about supporting MeeGo.

Nokia has innovative technology that it can draw from as it seeks a path to recovery—the temptation to give up and move on to other software platforms is largely a distraction. It's unclear exactly what kind of strategic changes Elop has in mind for Friday, but it seems clear that the company needs to move faster and improve its execution, not just pick a new direction in which to haplessly crawl.